After surging in January, mortgage application volume has so far moderated in February, but remains higher than it was a year ago.
According to the Mortgage Bankers Association’s (MBA) Weekly Applications Survey, total mortgage applications fell 6.4% during the week ended Feb. 14, as applications for refinances fell 8% and applications for purchases dipped 3%.
Although applications for refinances fell, due to a slight rise in mortgage rates, they were nonetheless 165% percent higher compared to the same week one year ago.
On an unadjusted basis, total volume decreased 5% compared with the previous week. Applications for purchases increased 2% compared with the previous week and were 10% higher compared with the same week one year earlier.
“Treasury yields moved slightly higher last week, despite uncertainty surrounding the economic impact from the spread of the coronavirus,” says Joel Kan, associate vice president of economic and industry forecasting for the MBA, in a statement. “The 30-year fixed mortgage increased five basis points to 3.77 percent as a result, causing refinance applications – driven by a 11 percent drop in applications for conventional refinances – to fall.
“Even with an eight percent decline, the refinance index was still at its third highest reading so far this year,” Kan adds. “Government refinance activity, which tends to lag movements in the conventional market, bucked the overall trend, as VA loan refinances jumped 23 percent.”
Lack of inventory continues to be the main factor holding back application volume and home sales.
“Too few options – especially at the lower portion of the market – are slowing some would-be buyers,” Kan says.
The refinance share of mortgage activity decreased to 63.2% of total applications, down from 65.5% the previous week.
The adjustable-rate mortgage (ARM) share of activity decreased to 5.4% of total applications.
The average rate for a 30-year fixed-rate mortgage was 3.77%, up from 3.72% the previous week.